Kepler's 2020: Literary Entrepreneur Reinvents the Bookstore

Submitted by Patrick Hogan on February 16, 2012 - 2:27pm

Tuesday, at O'Reilly's Tools of Change Conference (TOC), Praveen Madan spoke about the Kepler 2020 project. The project's goal is reinvent the bookstore and build a future for Kepler's Book's, a Menlo Park bookstore with a 50-year history and deep roots in the Silicon Valley community. The project is sharing its story, strategy, and perhaps its software to create a new business model that other independent bookstores might follow. Staff and friends of public libraries may want to watch the project to inform their thinking about libraries.

Two trends are important to shaping Madan's thinking about bookstores and their future. Influenced by Robert Putnam's book Bowling Alone, he believes technology has an isolating impact. The best bookstores, like Kepler's, serve as a much-needed community hub. Secondly, as advanced as book ecommerce sites can be with recommendation engines, samples, or search inside the book, they don't replace the discovery of browsing physical books.

A key challenge for Kepler's is one that libraries are spared: their legal structure. Madan is himself a bookseller or a "literary entrepreneur" as he terms it. He and his wife purchased The Booksmith in San Francisco's Haight Ashbury neighborhood in 2007. As a member of the Kepler 2020 team, he draws from proven ideas at his bookstore as well as his corporate experience as a management consultant and software industry executive. Madan recognized that some staff projects, while valuable to community building, were not sufficiently revenue-generating for the bookstore, like planning free author events. He worked with lawyers, drawing on quite specialized expertise, to create a bifurcated legal structure for: 1) a profitable bookstore; 2) and arts and lecture program.

Kepler customers value the store for discovery, a clear strength of libraries. In response to a question on what roles of the bookstore are most important, the top response at 76% was browsing and discovering new ideas; the second at 72 percent was as a place to buy books. More than half of customers owned Kindles.

Madan acknowledges that simply selling books will not keep bookstores in business. He does not see selling ebooks as the answer for independents. He said that the problem with the American Bookseller Association partnership with Google Books is that it's a "terrible experience" for the customer. He also referenced Barnes & Noble financials as reported in a 10k filing as cause for concern for small booksellers. “They had $860 million in ebook revenue, and they're losing money." Rather, a Kepler 2020 goal is diversifying revenue sources by "monetizing experiences and memberships." Kepler sells memberships and has 5,000 customers who have paid $50 for basic or up to $2,500 for a platinum membership. Kepler's also sells ticket to author events.

Madan doesn't mind if customers go from discovery at the bookstore to purchasing an ebook at Amazon. He'd rather embrace the technology industry and than fight it. "We want to be the first indie bookseller to sell or give away ereaders." he proclaimed. Madan emphasized re-defining the customer relationship model to be collaborative, open, and deeply engaged. He is comfortable with the showroom concept. "It’s OK if customers see a book at our store and want to buy an ebook. We’ll sell them something else. We don't want anybody to feel judged by the format they choose."

Madan appreciates the ties between bookstores and libraries and their history of working together. "Bookstores and libraries are completely open to the public, places where you can explore ideas, Where else can you do that without a charge at the door.” he said.

For more coverage of the O’Reilly TOC conference, see Kate Sheehan’s posts, Day 1 and Day 2 at American Libraries.